Economics
The federal finance minister, Mr. Joe Oliver announced annual updates of economic and fiscal projection. But these economic updates are basically prepared not keeping in mind the real economic growth of the country. The expectation is very high from this budget. These projections show that the government wants a balanced budget. The main results of Decision taken by them are as follows
The Government has decided that GST would be cut by 2 points plus boost stimulus spending. From this way they have shifted the tax from consumption to income. This has increased the deficit. Latest tax cuts and benefits of Government show close to $27 billion back in the pockets of families over this year and the next five years.
The other main measure of those includes the an income spitting tax cut for families who has children under 18 years up to $2000 a family. They also have announced a Universal Child care benefit, higher child care expense-deduction limit and also elimination of child tax credit. By this way the government has tried to achieve their social objective from their tax policies, but this policy will have much burden on government treasures in comparison to their benefits.
The overall federal tax burden is at its lowest level in over 50 years. It is clear that tax cutting package will leave little room for anything else. Now they have no space to announce big additional measures on the tax or spending side. According to Oliver, since July 2009, more than 1.2 million Canadians are working. It represents a 7.3 percent increase and the strongest job creation performances. The government remains committed to helping businesses thrive and create well-paid jobs for the people of Canada. The new small business Job Credit will enable hiring new workers or investing in additional training easier for entrepreneurs and help them grow their business.
According to Oliver, unused federal contingency funds will be used to reduce the size of federal debt.
The one Economic change since Feb 11 budget is dropping in price of oil. This dramatic fall down on oil pricing has hardest hit the economy. But in reality the lower oil prices also provide a boost to manufacturing companies in central Canada and leave more money in pocket of the consumer. Lower Canadian dollar and recent strength in the US economy is also a positive development for Canadian manufacturing and exports.
Analysis of these annual economic updates
A better policy would be a broader and deeper reduction in EI premium. That would be good tax policy and it would be good for growth and job creation. Hopefully In the budget the tax cuts to come are broader in application rather than too narrow designed and destructive.
According to Joe, the long term aim of the government is to reduce the taxpayer exposure to the residential real estate market. But Joe does not have specific plans for it.
Prime Minister Stephen Harper has a keen plan for those families who have young children by bringing in an income- splitting measure. This proposal will cost approximately Ottawa $3 billion yearly in inevitable revenue. However, it will give benefits only households approximately in millions and will assist to the those individuals who earn income above average and other spouse stays at home. Therefore the Government should rethink about its narrowly targeted proposal and look at other tax breaks for Canadians who don’t qualify to take advantage of income-splitting.
The government should consider other tax breaks that could balance its approach and can help other taxpayers for example, individual taxpayers, or having low incomes or single parent families. Actually Government has an estimated $6.4-billion budget surplus; therefore the Harper government plans to use its next budget to dangle tax cuts in front of voters in advance of an election which is expected in the fall of 2015. Oliver announced $8.2 billion from the gas tax fund for Ontario municipalities. But it is not sufficient. The government has sufficient fund and they should increase expenses on some infrastructure, transit and on road.
If we think about the way of increasing employment, Oliver didn’t specifically talk that what would be a number of jobs-creations. According to Oliver, overall, job-creation has slowed over the past 18 months. The main reason behind it, the weaker-than-expected global economic picture through which Canada’s vital export sector has been held back.
At this time Canadians are paying 41.8 per cent of their income in taxes. Oliver should make an efficient policy for this. According to Oliver the federal tax burden has been reduced by Ottawa and has urged other levels of government to reduce expenses and taxes.
The government is in a position to control the deficit in 2014-2015. Actually main duty of Joe Oliver is to manage the surplus. But managing surplus is more difficult to manage the deficit. At this time the government has a huge surplus. But now Global economic growth is projected to remain weak for the foreseeable future. With this domestic growth would also be weak. Changes in demographics will restrain growth; general potential economic growth remains to be 3 per cent per year, it’s now less than 2 percent. This indicates that surpluses of future will be rigorously controlled — not only for the present government but also for future government. Therefore the government should make plans and economic policies in such a way whose benefits should be high in comparable to the cost.
